Global gloom keeps stocks falling

By Ding Yiningand Wang Yanlin  |   2008-7-17  |     NEWSPAPER EDITION

SHANGHAI stocks yesterday continued the plunge of the previous trading day amid a gloomy global economic situation and uncertainty over future macroeconomic policies.

The benchmark Shanghai Composite Index, which tracks the yuan-denominated A shares and hard-currency B shares, slumped 73.58 points or 2.65 percent to close at 2705.87. The index once fell below 2700 points but edged up again in the afternoon.

Losers outnumbered gainers 804 to 64 and 39 remained unchanged. Turnover was 60.36 billion yuan (US$8.85 billion), down from Tuesday's 75.18 billion yuan.

China's first-half gross domestic product and consumer price index will be announced today. Investors earlier expected the government would ease the tight monetary policy to rescue troubled industrial companies and bolster the economy. But recent reports suggested the government would still take control over inflation as the top priority.

"China's economic growth rate of the second quarter may be slower than expected, but will still stay in a reasonable range,'' Zhang Ping, the head of National Development and Reform Commission, China's top planning agency, told Xinhua news agency.

Liang Hong, an economist with the Goldman Sachs, said China had little room to loosen its monetary policy because headline inflation remained above 7 percent and widespread power shortages may occur.

Both Huaneng Power International Inc and Huadian Power International Co Ltd slid after they announced predicted losses during first half of the year. Huaneng Power dropped 3.17 percent to 6.72 yuan and Huadian plunged 5.67 percent to close at 4.49 yuan.

Banking sectors suffered major losses despite predictions of their first half's increase in profits. China Merchants Bank Co, the nation's sixth largest bank, dived 4.1 percent to close at 22 yuan and China Construction Bank was down 2.56 point to 5.71 yuan.